Lurking Pitfalls

Abstract

In the relatively young history of the secondary market for life insurance, a great deal of attention has focused on the due diligence necessary to adequately gauge life expectancies. Still, many investors overlook various other life settlement transaction risks that have potentially significant consequences, including assuring that policies owned by trusts are saleable and otherwise what they seem to be, adequately following the patchwork of vastly differing state laws and regulations, potential misuse of the accredited investor exemptions of settlement regulation, and more. Thoughtfully manage and eliminate life settlement transaction risk through stringent due diligence procedures. Otherwise, even the simplest aspects of such a transaction may prove to be ticking time bombs.

TOPICS: Credit risk management, CLOs, CDOs, and other structured credit, information providers/credit ratings